KEY TAKE-OUTS What is the difference between stamp duty and transfer duty? How much stamp duty do I need to pay? When do I need to pay stamp duty? What happens if I can’t pay the stamp duty when it falls due? Firstly, it’s not actually called stamp duty anymore. It used to be and because old habits die hard, you’ll still hear this, but the updated term for this is ‘transfer duty’. So, where you see ‘transfer duty’ it is referring to ‘stamp duty’. They are one and the same. So, when you are doing your research online, talking to family and friends who have bought and sold before and/or trying to get your head around all the legal jargon and terms we use in conveyancing, it’s important to know this. How do I work out how much I need to pay? Revenue NSW has a great resource available on their website called ‘Transfer duty calculator’. As the name suggests, it allows you to calculate the duty that is payable. When is it payable? Transfer duty is payable on the earlier of: settlement; and 3 months after the Contract date whichever occurs first. So, if you’ve entered into a Contract to purchase a property with a standard 42-day completion period, you must pay the transfer duty on or before settlement. If you have entered into a Contract where the completion period is longer than 3 months, or you’ve purchased unregistered land and the land doesn’t register and settle within 3 months of the Contract date, transfer duty is payable within 3 months of the Contract date. The Contract date is the date Contracts were entered into and appears on the first page of the Contract for Sale document, also called the ‘exchange date’. Any exceptions to this rule? Yes. The exception to this is where you have purchased a residential property off-the-plan and it is your intention to use that property as your principal place of residence. In this instance, you may be eligible for a deferral of the payment of transfer duty. Where you are eligible, transfer duty for the purchase of an owner-occupied off-the-plan property is payable on the earlier of: settlement; and 15 months after the Contract date (that’s an extra 12 months on top of the usual 3 months). So, what is off-the-plan? Purchasing off-the-plan is where you enter into a Contract to buy a property before or during its construction, and settlement falls due once the construction of the property has been completed. What if I don’t have the funds to pay the transfer duty until settlement, but it’s due beforehand? The amount due will accrue interest until it is paid. Similarly to the Transfer duty calculator, Revenue NSW has a calculator available on their website which can be used to determine how much interest would be payable in this instance. Schedule an Appointment Now Real-life scenarios/examples Here are some ‘real-life scenarios’ to help you better understand and get your head around how the above information applies practically. Scenario 1 On 3 January 2025, Sally and Harry entered into a Contract to purchase a unit in Campbelltown. The Contract states that the completion period is 35 days after the Contract date, being 7 February 2025. When must the transfer duty be paid? If you answered on or before settlement, 7 February 2022, you are correct. Scenario 2 On 24 March 2025, Susan and Carol entered into a Contract to purchase a house in Bradbury. The Contract has a 6 month completion period on it, to allow the Vendors plenty of time to find something else to buy. Susan and Carol are happy with the extended completion period because they are living with Carol’s parents, so they aren’t in a rush to move in. When do Susan and Carol need to pay transfer duty by? The answer is 24 June 2025, being 3 months after the Contract date. Scenario 3 On 3 June 2025, Jack and Jill entered into a Contract to purchase a brand new home. The home is not yet built. It’s under construction and isn’t due to be completed until June 2026. Once completed, they plan on moving on. If the house is completed when they anticipate, June 2026, can they pay the transfer duty at settlement? If you answered yes, you are correct. Jack and Jill’s purchase qualifies for the off-the-plan deferral of duty. If the house is completed in June 2026, that’s 12 months after the Contract date. But, what happens if the construction is substantially delayed and the house isn’t completed and settlement doesn’t take place until November 2026? In this instance, transfer duty would need to be paid on or before 3 September 2026 (being 15 months after the Contract date), or else they would incur interest charges until it is paid. Scenario 4 On 2 February 2025, Sam entered into a Contract to purchase an unregistered block of land. The land is anticipated to be registered in 3 years. When is transfer duty payable? On or before 2 May 2025, being 3 months after the Contract date. Given the purchase of unregistered land doesn’t qualify as ‘off the plan’ and given the land is not due to be registered for over 3 months, payment of the transfer duty falls due within 3 months of the Contract date. ABOUT MELINA MAIOLO Melina has over 9 years of experience as a Licensed Conveyancer, acting for client matters involving; purchase and sale of residential and commercial property, Retirement Village Contracts, Put & Call Options, Call Options, and Family Transfers. She is passionate about helping a wide range of clients across all aspects of the buying and selling process and ensuring that her clients meet all their legal obligations. For further information please don’t hesitate to contact: Melina Maiolo Licensed Conveyancer & JP info@couttslegal.com.au 1300 268 887 Contact Coutts today. This blog is merely general and non-specific information on the subject matter and is not and should not be considered or relied on as legal advice. 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